Labour’s Employment Rights Bill is ignoring the voice of business
Labour’s Employment Rights Bill will stop businesses taking chances on those who need them most, writes Michael Lorimer
Today, the Employment Rights Bill is returning for debate in front of MPs. I’ll be keeping a keen eye on whether MPs have listened to the feedback that I gave them back in November, where I was one of only two business leaders – also known as job creators – amongst 40 other panellists invited to give evidence on the potential impact of the Bill.
At DCS Group, the FMCG manufacturing and distribution company that I run, we are genuinely passionate about growth, job creation and seeing our people prosper. Our company has grown successively every year since we were founded 31 years ago, and we now have 600 employees. Watching our colleagues work their way up the career ladder, earn more money and learn new skills is what brings us the greatest joy of all.
The government has set out a mission to ‘Get Britain Working’ again by bringing 2m more people into work, with Liz Kendall set to announce reforms to welfare to incentivise people into employment. The figures are stark. There are nearly 1m young people not in employment, education or training, and nearly 3m people long-term sick. This is all wasted human potential, with these people needing businesses to give them the support and training required to transition into successful, sustainable employment.
However, this Workers’ Rights package will have significant implications on the ability of businesses across the country to employ those most in need.
The problem with ‘day one rights’
I should stress, there are aspects of this Bill that are neutral for businesses, perhaps even positive. Most businesses, mine included, already go above and beyond many of the Bill’s new requirements. But provisions around giving full employment rights to new employees on day one and shortening probationary periods will have a damaging impact on our ability to make those ‘risky hires’ – those who would most benefit from a good job – with these being unaddressed by the government’s recent concessions to employers.
Today, making a hire from long-term unemployment comes with an element of flexibility. If it works out, everyone benefits. If it doesn’t, the employer has an exit strategy. As it stands, this Bill significantly erodes this flexibility.
This is a devastating prospect for those struggling to find work. It is hard enough to secure employment after a long break. If businesses, already drowning in red tape, fear the risk of legal entanglements, they will stick to ‘safe’ hires – those with uninterrupted CVs and minimal complications. This will create an unintended divide in the job market, locking out the very people the Bill claims to protect.
Large corporations with deep HR departments may find ways to cope. But for small and medium-sized enterprises (SMEs) – the real drivers of UK employment – the impact will be severe.
Most SMEs lack the resources to navigate complex employment law. They cannot afford protracted legal battles or the bureaucracy of managing ‘day one’ employment rights. Faced with this, many will simply reduce hiring, rely more on outsourcing or turn to automation. This is not speculation; it is already being reflected in employment data.
The cost of the Employment Rights Bill? Employers will take fewer chances
At a recent breakfast hosted by the Jobs Foundation, I heard from an inspiring leader from Sheffield who runs an organisation that gets young people into work. He gave the example of a young man who had never been employed before and came from a long line of worklessness. This man was given the right clothes and training to help prepare for an interview.
To any business, this young man was a risky hire, with no work history and a challenging backstory. But in him, the business saw something worth taking a chance on. He has turned out to be a superb employee and has quickly proved his worth, being promoted to a team leader and inspiring a new generation of employees.
In giving this young man the opportunity of a job, this business changed his life – taking him from a generation of unemployment and welfare to being an ambitious worker, progressing up the career ladder and generating value for both his employer and his family.
Alongside simply reforming the welfare system, tax incentives for businesses that employ long-term unemployed individuals would help get people back into work. Similarly, a structured probationary period would allow firms to assess new employees before committing to long-term obligations.
It’s still not too late for the government to reconsider its approach, but the measures announced so far are insufficient. Business leaders are prepared to support employment initiatives that are effective, and willing to engage with the government in their planning. However, we need policies that encourage and empower businesses rather than entangle them in unnecessary bureaucracy. Ignoring the voice of business will not be beneficial for employers or workers and will have the very opposite effect of what the government aims to achieve.
Michael Lorimer is CEO of DCS Group